OST-98-4291 / OST-98-4292 / AERO CONTINENTE, S.A. / MOTION OF AERO CONTINENTE, S.A. FOR LEAVE TO FILE OTHERWISE UNAUTHORIZED DOCUMENT AND RESPONSE TO SURREPLY OF FINE AIR SERVICES, INC. / 10/2/98

Application of

for a Foreign Air Carrier Permit pursuant to 49 U.S.C. section 41302

(Peru-U.S.)

Application of

for an exemption pursuant to 49 U.S.C. section 40109 from the provisions of 49 U.S.C section 41301.

(Peru-U.S.)

Aero Continente, S.A. ("Aero Continente") hereby respectfully moves the Department of Transportation (the "Department"), pursuant to section 302.4(d)(2)(f) of the Rules of Practice, for leave to file a response to the surreply of Fine Air Services, Inc. ("Fine Air"). The surreply, an otherwise unauthorized document, contains misstatements and misrepresentations which require correction and clarification to enable the Department to act on the basis of a full and accurate record. Acceptance of this response will provide the Department with information and references helpful to the disposition of the above captioned applications, and in support hereof, Aero Continente respectfully represents and alleges as follows:

AERO CONTINENTE IS FULLY QUALIFIED TO OPERATE INTERNATIONAL

AIR TRANSPORTATION AND TO COMPLY WITH THE LAWS, RULES AND

REGULATIONS OF THE UNITED STATES

1. The evidence of record established that Aero Continente is fully qualified to operate the services for which it has applied. Nothing in the empty rhetoric and third party misstatements in Fine-Air's pleadings provides evidence to the contrary. Aero Continente's application and the further information and documents that were supplied from its corporate files establish the solid foundation and growth of Aero Continente, the fact that it is owned and controlled by responsible citizens of Peru and operated by capable personnel experienced in the aviation industry.

2. Contrary to Fine Air's improper and unsubstantiated allegations, Aero Continente has never been "indicted" on any charge by the government of Peru. It is true that the word "indictment" appeared in a report from Aero Continente's accountants dated August 18, 1997. However the word, as it is used by Mr. Argiz, author of the report, describes an investigative proceeding in Peru and does not convey the same meaning as it would have in a U.S. legal context. In-fact, this use of the word "indictment" as translated from Spanish refers to an examination or investigation of company records to substantiate the validity of sources of funds used to finance the growth of Aero Continente. That is clear from the context of the document and should have been clear to Fine Air.

UNITED STATES STATUTE AND THE SUPREME COURT BAR ANY ACTION BY THE DEPARTMENT TO DELAY AERO CONTINENTE'S APPLICATIONS PENDING THE PERUVIAN GOVERNMENT'S LIFTING THE BAN IT PLACED ON FINE AIR

1. The Secretary of Transportation is Bound to Act Consistently With Obligations of the United States Government Under an International Agreement.

Under 49 U.S.C. section 40105(b)(1)(A), the Secretary of Transportation is required to act consistently with obligations of the United States Government under an international agreement. The Air Transport Agreement between the Government of the United States and the Government of Peru ("Bilateral Agreement"), signed on June 10, 1998, requires each country to grant designated airlines appropriate authorizations and permissions with minimum procedural delay so long as the designated airline is qualified to meet the conditions prescribed under the laws, rules, and regulations normally applied to the operation of international air transportation by the party considering the application.

Bilateral Agreement at Article 3(2)(A). Where parties do not agree, the Bilateral Agreement mandates formal consultations followed by arbitration. See Bilateral Agreement at Articles 13 and 14. Aero Continente is a designated airline qualified to meet the requisite conditions.

2. Peru's Ban Against Fine Air Has Not Been Found To Be Unjustifiable or Unreasonable.

Under 49 U.S.C. sections 41310(c)(1)(A) and (c)(1)(B), the Secretary of Transportation may take actions in the public interest to eliminate an activity of a government of a foreign country when the Secretary decides that the activity is an unjustifiable or unreasonable discriminatory practice against an air carrier or an unjustifiable or unreasonable restriction of an air carrier to a foreign market. Although 49 U.S.C. section 41310(c) permits the Secretary of Transportation to take actions to eliminate the unjustifiable or unreasonable discriminatory practice, the office of the Secretary dismissed the Complaint of Fine Airlines, Inc. (OST-95-691), because "Fine has not demonstrated, and the record does not support a finding, that Peru's action at the time was unjustifiable or unreasonable under the circumstances presented." Order Terminating Proceeding 96-7-5 at 4. To date, no evidence has been presented to indicate any change in these circumstances.

3. The Peruvian Ban on Fine Air Must Be Deemed Valid Under the Act of State Doctrine.

Act of state issues arise when a court must decide the effect of official action by a foreign sovereign. See W. S. Kirkpatrick & Co. v. Environmental Tectonics Corp., Int'l, 493 U.S. 400, 406 (1990) (doctrine did not apply where validity of official sovereign act was not at issue). The act of state doctrine requires that, the acts of foreign sovereigns taken within their own jurisdictions shall be deemed valid. Id., 493 U.S. at 409. To require the Government of Peru to lift the ban on Fine Air before granting Aero Continente's applications would imply that the official sovereign act, taken in Peru by the Peruvian Government, was not or is no longer valid. Such action would be unlawful i-n light of the record as it currently stands.

CONCLUSION

In summary, the self-serving assertions of Fine Air are wrong as a matter of fact and law. Fine Air asks the Department to act unlawfully to assist its reentry into Peru. The Department, as a matter of law and policy, must reject Fine Air's arguments.

WHEREFORE, Aero Continente, S.A. respectfully requests that the Department of Transportation, without further delay, grant its Application for an Exemption, Docket OST-98-4292, authorizing it to engage in the scheduled foreign air transportation, as described, pending action of its Application for a Foreign Air Carrier Permit in Docket OST-98-4291, and that it take such other or further action, consistent with the premises herein, as may be in the public interest.

Respectfully submitted,

Aero Continente, S.A.

By:

Lawrence D. Wasko